After hearing complaints from taxpayers during 17 town hall meetings, Gov. Dannel P. Malloy is expected to announce changes in his tax package as early as Thursday that would increase taxes on the wealthy and help the middle class.
Malloy is expected to drop his plans for eliminating the maximum $500 property tax credit that chiefly benefits middle-class homeowners, Capitol sources told Capitol Watch. Instead, the level would likely be set at $300, rather than zero as Malloy had proposed.
To help pay for it, Malloy would propose higher taxes on the wealthy by changing the levels that tax hikes would take effect. Democratic legislators were told about the changes Wednesday during a closed-door caucus.
Malloy's chief adviser, Roy Occhiogrosso, would neither confirm nor deny Malloy's tax plans Wednesday night. He noted that Malloy will hold a press conference at 1:30 p.m. Thursday in Hartford to talk about what he learned from citizens who complained at the town hall meetings.
"Come to the press conference and hear it from the governor himself,'' Occhiogrosso said.
As the state legislature prepares to vote in the coming weeks on Malloy's proposed $1.5 billion in tax increases, Republicans and Democrats are battling over the potential impact of those taxes.
Republicans have argued repeatedly that increased taxes can reach a tipping point and cause wealthy residents to flee the state.
But Democrats and various advocates disputed that notion Wednesday, saying that Connecticut's standard of living is so good that the wealthiest residents would not bolt to another state. The Better Choices Coalition, which supports higher taxes, cited several studies Wednesday that the rich would not head to other states.
"Tax them, and they will not leave,'' said Leo Canty, a longtime union leader and coalition supporter. "There is no data that says they will leave. I think Malloy's view on taxing wealth is trying to be the same as Foley. There's no data that says what Foley was saying is actually true.''
During the gubernatorial campaign, Greenwich Republican Tom Foley had said that he would close the state's budget deficit with spending cuts and no new taxes.
Canty disputed the notion that the rich, "like in the Grapes of Wrath, would pack up the Mercedes and the Lamborghinis and load the Perrier up on the roof'' and flee to a tax haven.
"It's time to get real,'' Canty told Capitol Watch in an interview.
The left-leaning Connecticut Voices For Children, which is part of the Better Choices coalition, has been pushing for years for higher taxes on the wealthy.
"Residents of all income levels benefit from the education, health, job training, public safety, and environmental protection services that our taxes fund,'' said Jamey Bell, the executive director of New Haven-based Voices. "We all have a stake in protecting these services and a more progressive income tax can help close our budget deficit while minimizing damage to our state's economy.''
But House Republican leader Larry Cafero said that high-flying hedge-fund managers can leave very easily by simply disconnecting their computers in Greenwich and re-plugging them in across the border in Westchester County, N.Y. or anywhere else.
"That hedge fund guy, who just moved here five years ago from Manhattan, is just going to stay here and take it?'' Cafero asked. "That's the myth. That's the joke.''
In 2009, the state legislature raised the top marginal rate on the state income tax to 6.5 percent for couples earning at least $1 million. That was an increase from the previous top rate of 5 percent. At the time, the tax hike on millionaires was supposed to close the budget deficit with increased revenues.
"It was documented and said by the Voices for Children that that was the solution to our problem,'' Cafero said. "Was that a myth?''